It’s a Small World After All

As cable operators of all shapes and sizes descend on the Walt Disney World resort in Orlando, Fla., this week for The Independent Show, the pay TV business is at a crossroads. Over-the-top services, changing viewing habits and the continued emergence of broadband as the dominant product are forcing small and large operators alike to rethink the pay TV business.

That transformation is occurring in the organizations that represent these businesses, too. The National Cable Television Cooperative, created decades ago as a buying group, is no different. While negotiating programming contracts will continue to be a big part of its mission, the NCTC is gradually shifting toward helping smaller operators cope with the ever-changing market.

Rich Fickle, president and CEO of the NCTC, spoke with Multichannel News senior finance editor Mike Farrell about those topics and others recently. An edited transcript follows.

MCN: What should NCTC members expect to get out of the Independent Show?

Rich Fickle: We always find that members get a lot out of hearing from other members. We started about a year ago diversifying some of the content, and we’ll have a good breakout session on company culture and customer service. But probably the bigger one is the whole IP-video space. You’ll see several exhibitors in that category, both platforms and OTT providers. That seems to be a key for the continuation of video.

If we can find ways and help these guys make that migration happen, to go from analog and [quadrature amplitude modulation] to IP, I think that’s really important. I think, we’re seeing some of the larger guys doing network DVR and more extensive on-demand offerings. The good news is that we’re finding ways to do that, too.

It’s probably unlikely programmers are going to stop raising rates, so they have got to embrace a different model. And our hope at the NCTC is that we can be a helping hand in providing options for them [small operators] in that new model.

The existing programming model is probably going south. [Operators] have to find other ways to keep customers happy with video.

MCN: What’s the alternative? OTT?

RF: OTT means a lot of different things to different people. One flavor of OTT is current programmers like premium-service providers like HBO. In an OTT world, maybe it’s the same programming relationship with the operator, but the OTT app for HBO offers well over 2,000 titles, compared to what you can get on VOD or a linear stream. The other application is niche content. Some of these guys are pretty well suited to fit some niches in an IP world that doesn’t take up full-time bandwidth.

Then, you’ve got bundled services like Sling TV and Sony [PlayStation] Vue. Hulu is trying to emerge as a vehicle for some of the large content groups. Some of those make sense to investigate. We’ll embrace other content sources and other forms of the same content but with a better experience for the consumer.

MCN: Is this like a build-your-own-skinny bundle offering with services like Hulu and Netflix, because the cable networks won’t let you do it?

RF: You’re kind of removing a barrier by adopting IP, removing the barrier of having the shelf space dominated by eight companies. Now, you can allow the consumer to have more choices. That’s what the business has always been about.

It’s hard to know who’s going to win the OTT contests, especially those that are recreating packages. But if you set it up right, you can let the market decide that. The cable operator takes on a role of providing the best choices he possibly can, the very best broadband network, the very best in-home WiFi experience and maybe an IP video set-top or apps. It could be an app business one day.

MCN: Apps are gaining traction with distributors across the board. I’ve heard people say one day that is how all services will be delivered — through apps, not set-tops.

RF: That’s right. You’ll hear at our show about a couple of members who will move that way next year. I think it’s probably too early for a broad number of companies to do that. But as usual, we have a couple of companies that are very entrepreneurial and they are going to move toward app-driven video delivery on Roku devices or Amazon Fire, and they’ll probably have that up and running this year.

MCN: Can you say who they are?

RF: I can’t. They want to make an announcement at the show. I don’t want to steal their thunder.

MCN: You recently launched VU-IT with Evolution, a new platform that includes a solution for back-office integration, OTT apps and enables IP-based linear and OTT services.

RF: There are two pieces to it. The initial impetus was to try to find a way to lower the cost structure of deploying TiVo for small and midsized operators. We’re also taking a more active role in some of the apps that show up on the TiVo box on behalf of those companies. There is a healthy pipeline of 15 or so companies either in the launch process or close to making that commitment and some already up and running.

In the process of doing that, we had to build out a back-office platform, we call it Bravo. We finished that and turned it up about a month ago. We’re finding that maybe there are some other opportunities for it. It is a way to facilitate back-office integration for mobile devices, OTT partnerships or some other things we’re working on. You’ll hear more about Bravo in the future.

MCN: That seems like a good example of how NCTC has evolved, you’re not just negotiating programming deals anymore.

RF: Our board told us about three or four months ago that the major programming renewals are still important, but maybe as important if not more important is finding ways to help members with these types of services, so we can create virtual scale if needed and bring the right partners or expertise to the table and help these guys move fast.

MCN: How are you going to do that?

RF: We have a list of about 10 projects. Some are a little further along than others. We have an IP VOD project that we are about to finish phase one on [with Evolution and its iVelocity unit]. There will be a couple of other phases to it and that will marry up with TiVo or a couple of other platforms. The idea is to provide a deep library of on-demand content with a very low cost structure and a good user experience. It’s all IP so it takes away the need for local markets to invest in VOD servers and that whole infrastructure. We treat it just like an OTT app so it can sit on mobile devices as well as set-tops.

That’s probably the most obvious. There are a halfdozen others, ranging from advanced advertising [to] network DVR.